Question 1

The U.S.federal government collects about one-half of the taxes in our economy.

Accepted Answer

A) True 
 B)False

Question 2

Suppose the government levies a "fat tax" on naturally-sweetened carbonated beverages to try to reduce the number of overweight children.If the tax revenues pay for the health problems of overweight children,the tax would satisfy the

Accepted Answer

A)   ability-to-pay principle.
B)   benefits principle.
C)   vertical-equity principle.
D)   horizontal-equity principle.E) None of the above
F) B) and C)

Question 3

State and local governments receive the largest portion of their tax revenues from

Accepted Answer

A)   sales taxes and income taxes.
B)   income taxes and property taxes.
C)   payroll taxes and income taxes.
D)   property taxes and sales taxes.E) A) and B)
F) None of the above

Question 4

Table 12-12
United States Income Tax Rates for a Single Individual, 2009 and 2010.
 
-Refer to Table 12-12.Kurt is a single person whose taxable income is $35,000 a year.What happened to his marginal tax rate between 2009 and 2010?

Accepted Answer

A)   It increased.
B)   It decreased.
C)   It did not change.
D)   We do not have enough information to answer this question.E) A) and D)
F) C) and D)

Question 5

Social Security is an income support program,designed primarily to maintain the living standards of the poor.

Accepted Answer

A) True 
 B)False

Question 6

If Vermont imposed a tax on butter of 50 cents per pound,it would

Accepted Answer

A)   be an excise tax.
B)   be an income tax.
C)   reduce tax revenue.
D)   cause the supply of milk to rise.E) None of the above
F) A) and B)

Question 7

Table 12-13
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
 
-Refer to Table 12-13.Which of the three tax systems is proportional?

Accepted Answer

A)   Tax System A
B)   Tax System B
C)   Tax System C
D)   None of the systems are proportional.E) B) and C)
F) C) and D)

Question 8

As government debt increases,

Accepted Answer

A)   Congress will reduce spending by an equal proportion.
B)   the government must spend more revenue on interest payments.
C)   a trade-off with government deficits is inevitable.
D)   tax rates must rise to cover the deficit.E) B) and D)
F) A) and D)

Question 9

Table 12-14
 
-Refer to Table 12-14.A proportional tax is illustrated by tax

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) A) and B)
F) A) and C)

Question 10

If a poor family has three children in public school and a rich family has two children in private school,the ability-to-pay principle would suggest that

Accepted Answer

A)   the poor family should pay more in taxes to pay for public education than the rich family.
B)   the rich family should pay more in taxes to pay for public education than the poor family.
C)   the benefits of private school exceed those of public school.
D)   public schools should be financed by property taxes.E) None of the above
F) All of the above

Question 11

The flypaper theory of tax incidence

Accepted Answer

A)   ignores the indirect effects of taxes.
B)   assumes that most taxes should be "stuck on " the rich.
C)   says that once a tax has been imposed, there is little chance of it changing, so in essence people are stuck with it.
D)   suggests that taxes are like flies because they are everywhere and will never go away.E) A) and B)
F) All of the above

Question 12

Sales taxes generate nearly 50% of the tax revenue for state and local governments.

Accepted Answer

A) True 
 B)False

Question 13

Because the marginal tax rate rises as income rises,

Accepted Answer

A)   higher income families, in general, pay a larger percentage of their income in taxes.
B)   lower income families, in general, pay a larger percentage of their income in taxes.
C)   a disproportionately large share of the tax burden falls upon the poor.
D)   higher income families pay the same percentage of their income in taxes as lower-income families.E) None of the above
F) A) and C)

Question 14

Table 12-1
 
-Refer to Table 12-1.If Damian has $33,000 in taxable income,his average tax rate is

Accepted Answer

A)   13.7%.
B)   14.6%.
C)   15.0%.
D)   15.2%.E) None of the above
F) A) and C)

Question 15

According to the ability-to-pay principle,it is fair for people to pay taxes based on their ability to handle the financial burden.

Accepted Answer

A) True 
 B)False

Question 16

Table 12-2
Consider the tax rates shown in the table below.
 
-Refer to Table 12-2.If Noah has taxable income of $43,000,his marginal tax rate is

Accepted Answer

A)   8%.
B)   16%.
C)   24%.
D)   34%.E) None of the above
F) B) and C)

Question 17

If transfer payments are included when evaluating tax burdens,then the average tax rate of the poorest quintile of taxpayers would be approximately

Accepted Answer

A)   negative 30 percent.
B)   negative 10 percent.
C)   positive 1 percent.
D)   positive 8 percent.E) B) and C)
F) B) and D)

Question 18

"A $1,000 tax paid by a poor person may be a larger sacrifice than a $10,000 tax paid by a wealthy person" is an argument in favor of

Accepted Answer

A)   the horizontal equity principle.
B)   the benefits principle.
C)   a regressive tax argument.
D)   the ability-to-pay principle.E) A) and C)
F) A) and B)

Exam 12: The Design of the Tax System.

Suppose the government levies a "fat tax" on naturally-sweetened carbonated beverages to try to reduce the number of overweight children.If the tax revenues pay for the health problems of overweight children,the tax would satisfy the

Correct Answer
verified

"A $1,000 tax paid by a poor person may be a larger sacrifice than a $10,000 tax paid by a wealthy person" is an argument in favor of

Correct Answer
verified

Social Security is an income support program,designed primarily to maintain the living standards of the poor.

Correct Answer
verified

If Vermont imposed a tax on butter of 50 cents per pound,it would

Correct Answer
verified

Sales taxes generate nearly 50% of the tax revenue for state and local governments.

Correct Answer
verified

As government debt increases,

Correct Answer
verified

If a poor family has three children in public school and a rich family has two children in private school,the ability-to-pay principle would suggest that

Correct Answer
verified

According to the ability-to-pay principle,it is fair for people to pay taxes based on their ability to handle the financial burden.

Correct Answer
verified

Table 12-14 -Refer to Table 12-14.A proportional tax is illustrated by tax

Correct Answer
verified

The U.S.federal government collects about one-half of the taxes in our economy.

Correct Answer
verified

Table 12-12 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-12.Kurt is a single person whose taxable income is $35,000 a year.What happened to his marginal tax rate between 2009 and 2010?

Correct Answer
verified

Table 12-1 -Refer to Table 12-1.If Damian has $33,000 in taxable income,his average tax rate is

Correct Answer
verified

If transfer payments are included when evaluating tax burdens,then the average tax rate of the poorest quintile of taxpayers would be approximately

Correct Answer
verified

Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Noah has taxable income of $43,000,his marginal tax rate is

Correct Answer
verified

State and local governments receive the largest portion of their tax revenues from

Correct Answer
verified

Because the marginal tax rate rises as income rises,

Correct Answer
verified

Table 12-13 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-13.Which of the three tax systems is proportional?

Correct Answer
verified

The flypaper theory of tax incidence

Correct Answer
verified

Exam 12: The Design of the Tax System.

Suppose the government levies a "fat tax" on naturally-sweetened carbonated beverages to try to reduce the number of overweight children.If the tax revenues pay for the health problems of overweight children,the tax would satisfy the

Correct AnswerverifiedShow Answer

"A $1,000 tax paid by a poor person may be a larger sacrifice than a $10,000 tax paid by a wealthy person" is an argument in favor of

Correct AnswerverifiedShow Answer

Social Security is an income support program,designed primarily to maintain the living standards of the poor.

Correct AnswerverifiedShow Answer

If Vermont imposed a tax on butter of 50 cents per pound,it would

Correct AnswerverifiedShow Answer

Sales taxes generate nearly 50% of the tax revenue for state and local governments.

Correct AnswerverifiedShow Answer

As government debt increases,

Correct AnswerverifiedShow Answer

If a poor family has three children in public school and a rich family has two children in private school,the ability-to-pay principle would suggest that

Correct AnswerverifiedShow Answer

According to the ability-to-pay principle,it is fair for people to pay taxes based on their ability to handle the financial burden.

Correct AnswerverifiedShow Answer

Table 12-14 -Refer to Table 12-14.A proportional tax is illustrated by tax

Correct AnswerverifiedShow Answer

The U.S.federal government collects about one-half of the taxes in our economy.

Correct AnswerverifiedShow Answer

Table 12-12 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-12.Kurt is a single person whose taxable income is $35,000 a year.What happened to his marginal tax rate between 2009 and 2010?

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1.If Damian has $33,000 in taxable income,his average tax rate is

Correct AnswerverifiedShow Answer

If transfer payments are included when evaluating tax burdens,then the average tax rate of the poorest quintile of taxpayers would be approximately

Correct AnswerverifiedShow Answer

Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Noah has taxable income of $43,000,his marginal tax rate is

Correct AnswerverifiedShow Answer

State and local governments receive the largest portion of their tax revenues from

Correct AnswerverifiedShow Answer

Because the marginal tax rate rises as income rises,

Correct AnswerverifiedShow Answer

Table 12-13 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-13.Which of the three tax systems is proportional?

Correct AnswerverifiedShow Answer

The flypaper theory of tax incidence

Correct AnswerverifiedShow Answer

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